Briggs Ave LLC v. Insurance Corp. of Hannover

May 30, 2006

BRIGGS AVE LLC, PLAINTIFF,v.INSURANCE CORP. OF HANNOVER, DEFENDANT.

The opinion of the court was delivered by: Gerard E. Lynch, District Judge

OPINION AND ORDER

Plaintiff Briggs Ave LLC ("Briggs") brings this action seeking a declaration that its insurer, defendant Insurance Company of Hannover ("ICH"), is required to defend and indemnify Briggs as to a personal injury lawsuit filed by a tenant in a building it owns ("the Bonilla lawsuit"). ICH now moves for judgment on the pleadings and/or summary judgment on the ground that Briggs failed to comply with various notice requirements contained in the Briggs policy, and that therefore Briggs is not entitled to coverage as to the Bonilla lawsuit. Briggs, in turn, cross-moves for summary judgment. For the following reasons, ICH's motion will be granted, Briggs's will be denied, and this case will be dismissed with prejudice.

BACKGROUND

The relevant facts are undisputed. ICH issued to Briggs a liability insurance policy that provided coverage for the period of September 20, 2002, to September 20, 2003. (ICH Rule 56.1 Statement ¶ 4; Briggs Rule 56.1 Statement ¶ 4.) On or about July 28, 2003, Nelson Bonilla --a tenant in a building owned by Briggs -- commenced a personal injury action against Briggs in state court, claiming that on May 14, 2003, he was injured when a piece of ceiling in his bedroom fell and struck him, and that the accident was caused by Briggs's negligence in maintaining the premises. (ICH Statement ¶¶ 8-11; Briggs Statement ¶ 8-11.) The lawsuit seeks $2 million in damages. (Lyness Aff., Ex. B., Bonilla Compl., at 4.) Shaban Mehaj, sole principal of Briggs, was informed of the incident on or shortly after May 14, 2003, and he visited the apartment thereafter. He asserts that he "was not informed that anyone in the apartment had been injured in this incident and had no reason to suspect so," and that he "did not notify [ICH] because [he] had no knowledge or notice that anyone had been injured." (Mehaj Aff. ¶¶ 5-8.)

On or about July 30, 2003, Bonilla served his personal injury complaint on the Secretary of State of New York (ICH Statement ¶ 13; Briggs Statement ¶ 13; Lyness Aff., Ex. J., June 15, 2004, Letter from Briggs to ICH, at 1), who, the parties agree, functions as Briggs's agent for service under N.Y. Bus. Corp. L. § 306. (Compl. ¶ 8; Lyness Aff., Ex. J., June 15, 2004, Letter from Briggs to ICH, at 1; ICH Statement ¶ 21; Briggs Statement ¶ 21.) Under that statute, "[s]ervice of process on [Briggs was] complete when the secretary of state [wa]s so served." Id. § 306(b)(1). The Secretary of State properly forwarded copies of the process to Briggs at the address it had on file (ICH Statement ¶ 21; Briggs Statement ¶ 21), but because that address was not current -- a result of Briggs's failure to advise the Secretary of a change of address -- Briggs did not receive the process forwarded by the Secretary of State, and remained unaware of the Bonilla lawsuit for some time. (Compl. ¶¶ 9-11, 20; June 15, 2004, Letter, at 1.)

Mehaj's affidavit explains that he failed to keep current the address on file with the Secretary of State because the attorney that set up Briggs as a corporate entity, and who filed the original address with the Secretary, did not explain to Mehaj the significance of keeping that address up to date. After the attorney stopped working for Briggs, Briggs moved offices, and while Mehaj diligently informed various city agencies, the IRS, his tenants, and others about the change, he did not know it was necessary to advise the Secretary of State. (Mehaj Aff. ¶¶ 14-23; ICH Statement ¶ 20; Briggs Statement ¶ 20.)*fn1

Briggs finally received notice of the lawsuit in late March or early April of 2004, when (it appears) Bonilla moved for default judgment against Briggs, and as required by the default judgment statute, N.Y.C.P.L.R. § 3215(g)(4), directly served Briggs at its then-current address. (Compl. ¶ 12; Briggs Mem. 2.)*fn2 Briggs promptly notified its insurance broker of the Bonilla lawsuit, and the broker promptly filed a claim with ICH, on or about April 5, 2004. (Compl. ¶ 14-16; ICH Statement ¶¶ 12, 15; Briggs Statement ¶¶ 12, 15; Briggs Mem. 2-3.)

ICH responded to the claim in a letter to Briggs dated April 12, 2004. In that letter, ICH observes that the Bonilla lawsuit arises from an accident that occurred eleven months earlier on May 14, 2003, that Briggs had been served with process through the Secretary of State over eight months earlier on July 28, 2003, but that Briggs did not inform ICH of the incident or suit until April 2004 . ICH states that this late disclosure violated conditions for coverage in the insurance policy, and excused ICH from defending Briggs against the lawsuit, or indemnifying it in any way for fees incurred, settlement costs, or any judgment ultimately obtained by Bonilla. The conditions that ICH claimed were breached by Briggs are reproduced here (and were reproduced in the letter) in full:

SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS

2. Duties in the Event of Occurrence, Offense, Claim Or Suit

a. You must see to it that [ICH is] notified as soon as practicable of an "occurrence" or an offense which may result in a claim. . .

b. If a claim is made or "suit" is brought against any insured, you must: . . .

(2) Notify [ICH] as soon as practicable.

c. You and any other involved ...

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